Profit, Loss and Other Comprehensive Income: Disclosing in Financial Statements

Abstract

The profit or loss determined by the companies in the reporting period depends not only on current income and expenses from operating and other activities. Its volume can be significantly influenced by income and expenses recognized as a result of unfinished operations of changes in the valuations of previously recognized assets and liabilities that remain on the balance sheet. The implementation of such transactions on unrealized assets or outstanding liabilities results in the recognition of other comprehensive income, which may be taken into account to determine the net financial result in subsequent reporting periods as a result of the reclassification adjustment. The presentation of other comprehensive income in the financial statements as part of the total profit or loss of the company improves its comparability, consistency and transparency. The purpose of the article is to determine the advantages and limitations of disclosure in financial statements of items of other comprehensive income as part of comprehensive income, taking into account the possibility of reclassification adjustments. The main research methods were general scientific and special approaches to theoretical generalization and grouping, systematization, comparative analysis, and logical generalization. The main problems of using the indicator of other comprehensive income in the formation of the report on comprehensive income are identified, in particular, the insufficient presentation by the Conceptual Framework of the content and disclosure of other comprehensive income, the lack of a clear distinction between the items of income and expenses that form net profit (loss) and other comprehensive income , insufficient disclosure of the conditions and timing of adjustments for the reclassification of items of other comprehensive income to profit or loss in the current period, uncertainty of disclosure of adjustments of reclassification in financial statements, making adjustments for errors of previous periods that lead to the recognition of other comprehensive income. It has been established that the format of the report on total income, which is compiled by Ukrainian enterprises, does not provide the possibility of distributing items of other total income according to the criteria and terms of adjustment of reclassification. This requires the introduction of additional indicators that will enhance the utility and transparency of information presentation for stakeholders.